Existence and Persistence of Price Dispersion: an Empirical Analysis / Saul Lach.

Format:

Book

Author/Creator:

Lach, Saul.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8737.

NBER working paper series no. w8737

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Existence and Persistence of Price Dispersion

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

Using a unique data set on store-level monthly prices of four homogenous products sold in Israel, I study the existence and characteristics of the dispersion of prices across stores, as well as its persistence over time. I find that price dispersion prevails even after controlling for observed and unobserved product heterogeneity. Moreover, intra-distribution mobility is significant: stores move up and down the cross-sectional price distribution. Thus, consumers cannot learn about stores that consistently post low prices. As a consequence, price dispersion does not disappear and persists over time as predicted by Varian's (1980) model of sales.

Notes:

Print version record

January 2002.